NEWS ANALYSIS — Bearing the brunt of the coronavirus pandemic on its business operations, major studios Disney, Paramount Pictures, Lionsgate and Sony Pictures face the fiscal music this week, reporting quarterly results, beginning with Sony before the market opens Aug. 4.
Most attention will be directed at Disney, which reports results after the market closes Aug. 4. With nearly every aspect of its business under siege during the pandemic, expect CEO Bob Chapek to focus on the positive: Disney+, which launched service in Asia (i.e. Japan) during the reporting third quarter, undoubtedly adding to the 54.5 million subscribers the platform reported at the beginning of May.
It’s an Ace card Chapek can use to counter Netflix’s July fiscal gem, generating almost 11 million new subscribers globally to surpass 190 million.
Disney moved intended theatrical release Artemis Fowl to its subscription streaming video platform during the quarter, while Pixar’s Onward joined the service after movie theaters shut down due to the pandemic.
Disney studio, pay-TV (ESPN) and theme park business segments will have little positive to report except maybe reduced operating costs — underscoring the company’s tens of thousands of furloughed workers. Disney re-opened parks in Paris, Florida, Shanghai and Hong Kong and then closed Hong Kong again temporarily following spikes in COVID-19 infections.
But Disney did score a coup of sorts when it contracted with the NBA to host the league’s pandemic-shortened season, including hosting players, coaches and staff at its facilities in Orlando, Fla.
“Many of Disney’s operations require bringing people together in large groups,” The Motley Fool’s Parkev Tatevosian wrote in a note. “The company won’t get back to running on all cylinders until there is a vaccine or treatment breakthrough for the coronavirus.”
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ViacomCBS has busied itself expanding the portfolio and distribution reach for ad-supported VOD service Pluto TV, in addition to online-based Paramount Network (formerly Spike TV) to consumers spending increasingly more time with over-the-top video.
The company inked a deal with NBCUniversal’s upstart Peacock streaming service for NBCUniversal’s Peacock for library movie and TV show content, including The Godfather Trilogy, “Ray Donovan,” “Undercover Boss,” and “Real Husbands of Hollywood,” among others.
“We believe COVID-19 is a catalyst for ViacomCBS to push through … significant hidden value in Paramount’s library and in ViacomCBS streaming services,” Laura Martin, analyst with Needham & Co., wrote in a July 31 note. “Film and TV libraries are becoming more valuable over time. With 140,000 TV episodes plus 3,600 films in the ViacomCBS library, this suggests valuable optionality to maximize economics through either developing or licensing its intellectual property to others.”
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With its theatrical business sidelined, Sony Pictures Entertainment in May announced an expansion of its “Imax Enhanced” releases, including catalog titles, as well as theatrical releases for home entertainment across the Europe, North America and Asia Pacific regions.
Imax markets a branded in-home “Imax private theatre” package that offers consumers the required technology, screen and audio to screen Blu-ray releases, including 4K UHD, in the home.
“SPE’s investment in the Imax Enhanced program ensures that we will continue to deliver even more of our films to audiences who now expect to experience movies at the highest technical quality — even in their own homes,” Pete Wood, SVP of new digital distribution at Sony Pictures, said in May.
In its previous fiscal result, Lionsgate attributed a $50 million loss due to COVID-19. The home entertainment distributor added more than 10 million Starz SVOD subscribers. Look for Lionsgate to up focus on home entertainment, which generated record $600 million in catalog revenue for the fiscal year ended March 31.
The distributor sold about $257 million in packaged-media product, down about $500,000 from 2019. Disc sales of major feature movies increased nearly 43% to $154.8 million from $108.4 million in the previous-year period.